Essay on Discussion Board Introduction

Submitted By tsdiquah
Words: 643
Pages: 3

The effect of globalization on the value chain varies in that it has its advantages as well as its disadvantages. Globalization has helped to promote economic growth in many underdeveloped countries. Dedrick, Kraemer, & Linden stated, “Component suppliers must find unique ways to improve their customer’s value capture prospects through means such as new functionality, lower cost, or shorter time-to-market.” (Dedrick, Kraemer, & Linden, 2010) A corporation’s primary goal is to make as much money as possible while spending as little as possible, and by outsourcing, or setting up offices across the globe, they have found a means in which to do so. They are now able to produce their products at a lower cost while maintaining the same quality, allowing them to charge their customers lower prices and still increase their profits. The profits gained can then be used toward research and development to create innovative products and technology that will meet or exceed their customer’s expectations and allow them to gain a competitive advantage over their industry.
While globalization has helped to increase economic growth in countries around the world by creating new jobs, it has cost the company’s home base by taking away jobs. Gereffi, Humphrey, & Sturgeon, mention in their article, “The rising integration of world markets through trade has brought with it a disintegration of multinational firms, since companies are finding it advantageous to ‘outsource’ an increasing share of their noncore manufacturing and service activities both domestically and abroad.” (Gereffi, Humphrey, & Sturgeon, 2005) This problem with this is that the products being produced are more than likely going to be marketed primarily to consumers in that company’s home base, but if that market continues to see an increase in the unemployment levels, than they are going to be less likely to purchase that product and the company may find that it will still lose money in the long run. On the other hand, it has helped to bring about changes in the way employees are treated in other countries. Many countries have gotten rid of sweatshops and created labor laws banning the use of children as well as overworking and underpaying laborers. Lund-Thomsen, & Nadvi, stated, ““The combination of vertical GVC pressures, in the form of demands for CSR compliance, the threat of boycotts and international media exposure, in the four export industries created a need for the development of relatively sophisticated, horizontal, CSR monitoring mechanisms aimed at ensuring compliance with international labour standards.” (Lund-Thomsen & Nadvi, 2010) Without globalization, this may not